Total U.S. credit card debt has surpassed $1 trillion this year, the highest it’s ever been. That’s on top of the total of $17 trillion of household debt held by Americans right now, according to data from the Federal Reserve.
That debt is both caused by and contributes to the increased prices of goods across sectors. By and large, Americans are paying more for everyday goods than they were in previous years. Viral threads like a recent one on X (formerly Twitter) showing what $100 worth of groceries looks like — not much — pop up regularly. Things like food, baby formula and car insurance are all more expensive in 2023 than they were the year before.
Apparel isn’t safe from these changes, either. Mastercard senior advisor and former Saks Fifth Avenue CEO Stephen Sadove said we should expect to see fashion hit harder than other categories.
“Things like restaurants and electronics will be doing much stronger than apparel,” he said. “Consumers will have to make choices about what they’re going to be spending on.”
Apparel prices are up across the board, with women’s outerwear, in particular, rising in price by 9.3% in 2023 compared to 2022. Consumers told Glossy that their fashion spending habits are already affected.
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“It really does just feel like everything has to get stretched a bit further,” said Lauryn Chamberlain, a writer and novelist, over Instagram DMs. “With prices going up for food, rent and other necessities, I want to be a bit more cognizant about buying non-essentials like new clothes. I have a good income, but it certainly doesn’t take me as far as I hoped it would”
Housing, in particular, has become a major factor in depressing apparel spending. Rent prices reached a record height last year and have dropped only 2% so far in 2023, as of August. New York City, in particular, is in the midst of an affordability crisis, with average rents in Manhattan surging past $5,500 per month. A report from April showed that more than half of all residents of New York City can’t actually afford to live there, further pushing them into debt.
“Since I’m moving back to New York this fall, too, the price of housing is my No. 1 concern and priority,” said Chamberlain, who moved to Toronto from New York in 2019 and is moving back later this fall. “No more new clothes until I rent and furnish a pricey NYC apartment.”
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Frequent price increases are also proving exhausting to consumers.
“I don’t understand why garments need to be so incredibly expensive,” said one jewelry designer who asked to remain anonymous. “I do understand that workmanship and fabric quality are a main part of the costs, but now I think it’s all the marketing behind it that could be jacking up the prices. I shop, but I’m thinking twice now before I make my decision to purchase”
Sadove said fashion is experiencing a bifurcation. Luxury and affluent shoppers are mostly unaffected by things like credit card debt and rising rent prices.
“It’s the low-middle consumer who will have to stretch their dollars,” he said.
The brands that cater to those highly affluent customers are leaning even harder on them as the aspirational shopper drops off the map. Last week, MyTheresa CEO Michael Kliger told Glossy that the affluent customers unaffected by inflation are the ones who have kept MyTheresa profitable through the pandemic.
But other brands don’t have that luxury.
“It’s at the point where I’m looking at our own clothes and I couldn’t even afford them if I was a customer,” said Wray Serna, founder of the DTC apparel brand Wray. ”We’ve lowered our prices so that everything is under $200. That’s still inaccessible to a lot of people, but we can’t go any lower.”
Michelle Meyer, chief economist at Mastercard, said there’s reason for some hope. Inflation as a whole was at 6% last year but has lowered to 3% this year.
“There’s always risk in the economy,” Meyer said. “There are risk factors like the auto strike and concerns around student loan payments. A lot of speedbumps are all hitting at the same time right before holiday season. But our sense is that the economy is on solid footing right now.”
